TIME - 21:33 HOURS

For each line of coverage coverage (the type of policy, e.g. Property; General Liability; or Auto) the insurance company files rates in each state. Also, for each type of coverage there is an "exposure basis" that is used. The rate multiplied by the exposure basis equals the premium.

Example

For Property insurance the exposure basis is the value of the property insured. A rate of $0.20 per $100 of value (20 cents) would result in a premium of $16,000 for a building (Property) worth $8,000,000.

Property and Marine insurance is based on value of the property insured and the rates are per $100. For General Liability and Professional Liability the rates are per $1,000 of revenue or payroll.

EXPOSURE BASIS

Exposure Basis for different types of insurance (varies sometimes by carrier). In all cases the limit of insurance selected also affects the rate and resulting premium:

Coverage Exposure Basis Typical Rates/Premiums*
Property The replacement value of the property (which usually becomes the limit of insurance). $0.20 per $100 for buildings$0.30 per $100 for business personal property (contents)
Inland Marine and Ocean Marine (which generally refer to a number of different types of coverage). The value of the items insured. Example:$0.10 per $100 for Transit insurance. Higher for international shipments
General Liability Revenue or total payroll of the insured $0.50 per $1,000
Errors & Omissions (E&O; a/k/a Professional Liability Revenue of the insured $1.00 per $1,000
Workers Compensation

Annual Payroll in each class

Employees are placed in classifications based on their job duties. Class descriptions and codes vary by state but a typical one is "8810 - Office Clerical Workers; Not Otherwise Classified". Each class has a different code.

There are over 600 WC classifications and the rates vary for each class in each state. Rates are per $100 of annual payroll in the class.

Class Rate Per $100
8810 .25 - 1.25
8742 .40 - 1.60
5191 1.75 - 5.00

 

Commercial Auto Value of the vehicle for the Physical Damage coverage and the use of the vehicle, and the limit selected, for the Liability coverage. $400 for Physical Damage and $900 for the Liability coverage. Varies widely by state and usage of vehicle.
Umbrella % of the underlying General Liability premium; the Auto premium; and the Employers Liability coverage under Workers Compensation. Average of $1500 per $1 million of limit selected, declining as limits increase. $7,000 for a $5 million Umbrella limit for a company with a $9,000
Employee Dishonesty # of employees overall, # who control cash and checks, and the limit selected. $750 for a $250,000 limit
Directors & Officers Liability Strength of financial statements, # of shareholders, limit selected $5,000 for a $1,000,000 limit (private company)$25,000 for a $1,000,000 limit (public company)

*Rates vary widely by carrier and are affected by the characteristics of the insured's operations. Provision of these "typical rates" is for educational purposes only and does not constitute an offer of coverage

 

site designed and developed by StickyDigital, Inc.